We are investigating the role of chromosomal proteins in determining the structure and regulating the function of chromatin. Transgenic animals, cell free chromatin assembly systems, and in vitro- reconstitution assays are used to determine the role of chromosomal proteins HMGN1 and HMGN2 in chromatin structure and nuclear function. These two proteins are the only nonhistone structural proteins known to specifically associate with the nucleosome core, which is the building block of the chromatin fiber. We found that these proteins unfold the higher order chromatin structure thereby facilitating access to the underlying DNA sequence and facilitating the orderly progression of various DNA-dependent actitvitis in the context of chromatin. By confocal immunofluorescence we find that the HMGN2 protein colocalizes with nascent transcripts. This colocalization is dynamic and reversible and may be regulated by post-translational modifications. We also find that the proteins are not always associated with DNA and actively shuttle between the nucleus and the cytoplasm, in a cell-cycle dependent manner. This shuttling is affected by phoshporylation of specific residues in the proteins. Our studies suggest that the intracellular trafficking and localization of these proteins is in part regulated be specific postranslational modifications. We also find that the histone acetyl transferase and transciptional coactivator p300, acetylates HMGN proteins at multiple sites. All of the sites, which were mapped both in vivo and in vitro, are in evolutionarily conserved domains suggesting that this modification may be an important aspect of the celular function of the protein. We have also devised a new strategy for characterizing the parameters governing the binding of HMGs and other proteins to chromatin subunits. These studies provide novel insights into the molecular mechanisms whereby specific nuclear proteins regulate the strucure of chromatin and affect numerous DNA-related activities in the nucleus of the cell. We have created knock out mouse for HMGN1. This mouse displays pleiotropic effects on gene regualtion and cells derived from the mouse have tumorigenic and have diminshed ability to respond to stress. The knock-out mice and tissues derived from it provide new investigative approaches for studies on the role of chromatin in gene regulation and cancer etiology.